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Molson Coors doubles with $12B Miller buyout

A mega-merger of international beer giants will end up pouring the global Miller brand into the Molson Coors Brewing Co. family in a $12 billion (U.S.) friendly takeover.

In a side deal aimed at clearing regulatory hurdles for Anheuser-Busch InBev’s monster acquisition of SABMiller, Molson will acquire SABMiller’s 58 percent stake in MillerCoors, giving it full control over brands like Coors Light, Miller Genuine Draft and Blue Moon.

The takeover would more than double Molson Coors’ revenue, which was $4.15 billion last year, cut costs by $200 million a year by 2020 and add about $1 billion in earnings before interest, taxes, depreciation and amortization.

“This transaction is a game-changing opportunity for Molson Coors and advances our ambition to be the first choice for consumers and customers,” said chief executive Mark Hunter said on a conference call.

“In short, we will be a more competitive global company,” he said.

AB InBev the maker of Budweiser, Busch and Labatt’s products-- reached a final agreement Wednesday to buy SABMiller, the owner of Miller Lite and Grolsch, in a $107 billion deal that will combine the world’s two biggest brewers and create a company that makes almost a third of the beer consumed worldwide.

But in the U.S., the deal will not bring arch rivals Budweiser and Miller under the same roof. Instead, Molson Coors will get the rights to the Miller brand name and full control of operations.

Under the agreement announced Wednesday, Molson Coors will acquire full ownership of the Miller portfolio outside of the U.S. and retain the rights to all of the brands in the MillerCoors portfolio for the U.S. market, including Redd’s and imported brands such as Peroni, Grolsch and Pilsner Urquell.

While analysts had speculated Molson Coors would buy out the rest of the MillerCoors venture, the acquisition of the Miller brand globally wasn’t as widely expected. The move plays into Molson Coors’ strategy of international expansion by adding another recognizable American brand to take abroad, Hunter said.

In Canada, the beer market has long been dominated by Molson Coors and AB InBev, through its ownership of Labatt, although the two beer giants have increasingly been challenged by the popularity of smaller local craft brewers.

The deal will also allow Molson to once again sell Miller Genuine Draft and Miller Lite in Canada. Molson had lost those rights earlier this year when SABMiller took the distribution back in-house, noted analyst Adam Fleck of Morningstar Equity Research.

“I don’t think this changes a whole lot for the U.S. or Canadian beer drinker, at least not initially,” said Fleck.

“There will be potential for shipping efficiencies and other cost savings down the road, which could be reinvested into new product development, but this will likely take some time to realize,” Fleck said.

But he noted that overall it’s a favourable deal for Molson Coors at a good price that will strengthen its presence in U.S. and international beer markets, particularly Latin America, Europe and Asia.

SABMiller agreed to sell its majority stake in the MillerCoors joint venture in an effort to ease regulatory concerns that beer giant AB InBev would have a stranglehold on the U.S. market after the merger.

MillerCoors was a joint venture formed in 2008 in the U.S. by SABMiller and Molson Coors, which has dual headquarters in Denver and Montreal since suds makers Molson and Coors merged 10 years ago.

The latest takeovers are expected to be completed in mid-2016, with the Molson side deal contingent on the bigger beer merger.

With files from The Star’s wire services

The new Molson Coors numbers

Will be the # 2 brewer in the U.S. with 27% market share;

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